Seafood fraud cases plummet as NOAA cuts investigators

Despite increases in fish importation and consumption, in the U.S., fraud cases have plummeted as NOAA cuts investigators. A look at the methods used to find and catch fraudulent fish. (The Baltimore Sun)

Despite increases in fish importation and consumption, in the U.S., fraud cases have plummeted as NOAA cuts investigators. A look at the methods used to find and catch fraudulent fish. (The Baltimore Sun)

In a sprawling warehouse five miles inland from the port of Newark, N.J., Special Agent Scott Doyle was dwarfed by the metal shipping container that had just arrived from Indonesia and was headed to Maryland. It held 14 tons of pasteurized crabmeat, packed into 28,008 one-pound cans.

To Doyle, who has been an investigator for 27 years at the National Oceanic and Atmospheric Organization, the container held mysteries — and the potential for crimes. He's seen a lot over the years, enough to know that the crab might have been taken in violation of quotas or traded to another company with forged papers or repackaged as more expensive Maryland blue crab. It might even be a front for smuggling drugs or guns.

It's Doyle's job — and that of a shrinking band of fellow investigative agents — to sift those possibilities from the flood of crabmeat, fish and other imported and domestically harvested seafood.

Seafood fraud is a highly lucrative enterprise. American consumers ordering a sushi platter, fried crab cake, broiled sea bass or other seafood might not realize that about 25 percent of all wild-caught seafood imports are part of the illicit trade, according to a study published this year in the journal Marine Policy. Those illegal imports are worth $1.3 billion to $2.1 billion annually across the United States, the world's second-largest importer of seafood.

President Barack Obama warned this year that the black market for fish "threatens our oceans and undermines our economy and often supports dangerous criminals." He directed several federal agencies, including NOAA, to produce a plan to crack down on seafood fraud and black-market fishing; the recommendations are due this month.

Seafood fraud and black market fishing are highly lucrative enterprises in the United States and around the world. But cuts to federal investigators have hurt efforts to uncover criminal enterprises.

Sen. Barbara A. Mikulski of Maryland and a cadre of legislators from Virginia also have highlighted the problem, asking the administration to probe the fraudulent mislabeling of seafood as Chesapeake Bay and Atlantic blue crab meat. "Some processors are importing foreign crabmeat, repacking it at a domestic facility, and then labeling it as a product of the United States," they said in a letter to the president in July. Such deceptive labeling, they added, "misleads consumers and threatens the livelihood of the watermen in our states."

There's a lot at stake. Restaurant diners who order a piece of white tuna sushi might be served a much less expensive fish such as escolar. Mislabeling also raises serious health concerns for people with allergies who could be ingesting an unknown fish, or for pregnant women avoiding mercury in certain fish products. Illegal seafood can also hurt U.S. fishers by putting them at a competitive disadvantage — including Maryland crabbing companies whose product and price can be undercut by mislabeled foreign crab.

I find it difficult to know anything about domestic seafood. And almost impossible for something flown in from 5,000 miles away.— Chef Spike Gjerde, Woodberry Kitchen

"The level of fraud is insane," said Spike Gjerde, the chef of Baltimore's Woodberry Kitchen. That's one reason he deals directly with watermen in the Chesapeake Bay area and refuses any imported seafood.

"I find it difficult to know anything about domestic seafood," he said. "And almost impossible for something flown in from 5,000 miles away."

Despite calls in Washington for a crackdown — to protect consumers as well as law-abiding American companies and fishers — NOAA has been slowly whittling down the team of agents that handles complex investigations.

The lack of skilled criminal investigators "is problematic," said Elinor Colbourn, a U.S. attorney for the environmental crimes section of the Department of Justice.

That decline in enforcement — along with its impact — is a tale of a bruising political fight that has pitted many Northeastern fishers and their allies in Congress against federal regulators. Its impact extends from businesses on Maryland's Eastern Shore to lawmakers in Washington and to fishers in Gloucester, Mass., the oldest commercial fishing port in the nation. Not to mention the NOAA agents along the Northeast coast.

Special agents like Doyle are becoming as rare as some of the fish they protect, their numbers falling by a more than a third, from 147 to 93, since 2008, with further cuts in the works. He and his seven special agents make up the entire NOAA investigative crew monitoring the coast from New York to Virginia, as well as 1.4 billion pounds of annual seafood imports.

Nationwide, the group of special agents charged with investigating both criminal and civil illegal fishing operations is smaller than the Ocean City Police Department.

A review of NOAA records obtained by The Baltimore Sun through a Freedom of Information Act request shows that enforcement cases nationwide have fallen even further. Since 2008, the number of civil and criminal cases sent to the agency's general counsel and U.S. attorneys plunged from 793 to 215 — a drop of nearly 75 percent.

NOAA defended its enforcement strategy. The enforcement team may pursue other methods to ensure compliance, including written warnings and fix-it notices, said agency spokesman Scott Smullen. He also said that statistics do not tell the whole story, because some cases consume more resources, and take years to investigate.

But Doyle acknowledged the difficulty of detecting fraud within the international seafood industry, especially as resources for enforcement shrink.

"If I was gonna be a criminal, I would be in the fish and wildlife smuggling business," he said. "Nobody has any idea what's going on. They just buy fish."

Out in the field

At the New Jersey warehouse, Doyle worked with agents Jeffrey Ray and Matt Gilmore to scrutinize the 40-foot-long and nearly9-foot-tall shipping container. They were casually dressed, but the Glock handguns that hung from their belts were a reminder of the seriousness of their work. The random inspection was triggered by the concerns of members of Congress about fake Chesapeake Bay crabmeat — a complaint that has popped up periodically in Maryland as the supply of blue crabs has plummeted.

Gilmore, who wore a short-sleeve, navy-blue NOAA law enforcement shirt and khaki cargo pants, entered the container, which was cooled to 35 degrees. He returned with a box from the back of the container and gave it to Doyle, who sliced it open with a knife and began inspecting several one-pound crabmeat tins.

"Looks like they're all the same," Doyle said. The tins were all marked "wild caught" from Indonesia. So far, everything was checking out with customs forms.

After an hour of taking pictures, pulling samples and taking notes, the federal agents put everything back. The distributor that ordered the crabmeat would know its shipment had been inspected, but not by whom.

"We may meet with [that company], or we may do some covert actions and follow what they're selling," Doyle said. Nothing was illegal on its face. Like most other complaints about alleged fraud, it was going to take a while to investigate.

For Doyle and his team, field work is just a small part of an investigation. Agents can spend months or years examining corporate filings, satellite data and other records to unravel increasingly complex cases that span the globe.

Much of that investigative work is handled from a small office at a New Jersey strip mall — in a building that could easily pass as a dentist's office. There's no body of water in sight and a NOAA sign is barely visible.

Inside, the decor provides clues to Doyle's personality, and his attempts to liven up the tedious work.

On his desktop computer is a large photo of his beagle, Daisy, who recently died; beside the computer a smaller photo of his wife and son, as well as a fake NOAA ID card, on which he replaced his photo with one of Richard Gere. Hanging on the wall are two large boxing belts with silver buckles — given annually to the agents with the most successful domestic and international cases. (Doyle has yet to get any of his agents to wear them.)

"Like other federal agents, you are catching bad guys," Doyle said. "But we also hope to do something good for the environment."

"Catching bad guys" is difficult when the contraband, illicit seafood, is hard to detect — unlike drugs or guns. Or when the bad guys are part of a profession — fishing — that has long been glorified, as television shows such as "Wicked Tuna" or "The Most Dangerous Catch" illustrate.

But as ocean stocks shrink and prices rise, criminals can exploit shortages to make a quick buck. At least 20 percent of Indonesian crab entering the United States is estimated to be taken illegally, according to the study published in Marine Policy this year. And an importer of a single shipping container filled with cans of crabmeat could make a small fortune simply by changing a few words on the labels. If the labels are switched from "product of Indonesia" to "product of Maryland" — which commands a higher price on the open market — the vendor of that container in New Jersey, for example, could sell the crabmeat for an extra $500,000.

Recent studies have put a spotlight on the problem.

The conservation group Oceana ran DNA tests on more than 1,200 samples of fish sold in stores and restaurants, finding mislabeling in a third of the cases nationwide, according to a study published last year. Some species, including snapper, were mislabeled as much as 89 percent of the time, often substituted with cheaper sea bream or tilapia. Oceana didn't sample crab because that was more costly.

The U.S. Food and Drug Administration found mislabeling in 15 percent of the DNA samples taken from wholesalers, according to a study published in October. The highest rate also was associated with snapper, which was mislabeled 37 percent of the time.

Jack Brooks, co-owner of J.M. Clayton Seafood in Cambridge, has complained about imported crab and mislabeling in the Chesapeake Bay region to Obama's task force, which is working on recommendations to respond to his directive. "The fraud event happens when unscrupulous domestic companies, seeing a quick and profitable opportunity, simply open this crabmeat and put it in a domestic container," he said.

Brooks, who processes crab and serves as the president of the Chesapeake Bay Seafood Industries Association, added that there is "no or very limited enforcement" of such fraud, which can net businesses an extra $4 to $9 per pound. That leaves domestic competitors with higher costs and puts seafood-related jobs in jeopardy.

As dozens of countries have recognized the emerging international threat, Interpol began a campaign to fight fisheries crime last year.

"People say, 'It's just fish,' but the illegal trade of wildlife products is huge," said Doyle's colleague, NOAA Special Agent Stuart Cory, who is vice chairman of Interpol's new fisheries working group. In fact, fish and wildlife ranks third behind only firearms and drugs in illegal trafficking.

The relative cloak of secrecy on the high seas is one attraction for criminals.

SaidDoyle, "It's like trying to solve a bank robbery overseas where you have a suspect but no witnesses, and the victim can't talk."

One that didn't get away

The biggest fisheries crime that Doyle and his team ever helped to crack — known simply as "Bengis" — offers a look at the complex international scope of modern-day investigations.

At the center of the case was Arnold Bengis, who held South African and United States citizenship, and who controlled one of the largest privately owned fishing operations in South Africa. His company shipped thousands of tons of Chilean sea bass, South African rock lobster and other seafood to the United States from the 1980s to the early 2000s. He amassed more than $25 million in assets, including homes in Manhattan and the tony beach town of Bridgehampton, N.Y.

But after South African fishery authorities warned that Bengis' company might be importing fish that had been caught in violation of quotas, U.S. authorities investigated.

Doyle, Ray, JamesCassin and agent Chris Musto began surveillance of fish containers, import documentation and even trash. They stayed in the same hotels and rode in the same elevators as they tracked Bengis' people. They teamed with South African authorities and other U.S. agencies, including Customs and Border Protection, to monitor his imports.

Over the course of several months, the international team uncovered a sophisticated criminal undertaking.

Bengis' company was falsifying South African export documents to cover up violations of fishing quotas and other regulations. For example, it reported that one shipment headed to the port of Newark contained 4,003 pounds of lobster tails, but it actually held 17,950 pounds. That shipment also reported several thousand pounds of tuna fish and monkfish that were actually highly regulated species, Patagonian toothfish, commonly known as Chilean sea bass, according to investigative documents.

The smuggling plot went even deeper. According to court documents, the operation was bribing fishery managers in South Africa, establishing shell companies to funnel the illicit profits and arranging for South African women to work illegally in a fish processing factory in Portland, Maine.

Bengis and two associates pleaded guilty in 2004 to conspiracy to smuggle $8.9 million worth of illegally harvested seafood into the United States. He was sentenced to 46 months in prison and was released in 2007.

Last year, a federal judge ordered Bengis and two associates to pay $29 million in restitution to South Africa — the largest restitution penalty ever handed out under the U.S. law that prohibits the sale and transport of illegal fish and wildlife. Efforts to recover the money continue today.

Bengis and his associates are suing the South African government for $11 million for helping the United States with the case against them, according to South African news reports. The group said it was assured by South African authorities that they had no interest in the U.S. proceedings, according to those reports. Bengis' attorneys in New York did not respond to requests for comment.

Yet even as the Bengis case was working its way through the courts, giving NOAA investigators a big victory, New England fishers were complaining loudly about the agency's domestic enforcement efforts — a protest that resonated in Washington.

Angry fishermen

The scene outside NOAA's regional office in Gloucester was ugly. On a cool October day in 2009, about 300 people gathered in a parking lot, where angry protesters erected a tableau showing the agency's director lynching two fishers clad in orange and yellow rain slickers. A hand-painted sign read: "BETRAYED BY GOVERNMENT."

Their target: Jane Lubchenco, a former Oregon State University zoology professor and MacArthur Foundation "genius grant" winner who had become the head of NOAA earlier in the year.

The fishers in Gloucester and along the North Atlantic coast were fuming about new regulations that further restricted their catch, changed how they could fish and increased their chances of running afoul of the law. Further exacerbating their woes were fines that appeared harsher than those in other regions. Between 2004 and 2009, "Notice of Violation Amounts," or initial fines, were $5.5 million in the Northeast — more than twice the level of any other NOAA region.

"Most of us had violations," recalled Greg Walinski, who used to catch cod in the Gloucester area on his boat, the Alicia Ann. "The ocean was diced into so many areas and there were only so many times you could fish. … The management process was insane."

Amid the protests, New England legislators such as Rep. Barney Frank and Sen. John Kerry pressed Lubchenco on complaints about "excessive fines" and "retaliatory actions" by NOAA law enforcement. She acquiesced, asking the Department of Commerce inspector general to investigate industry concerns.

But the agency also moved ahead with a new fisheries management plan in the Northeast, where, by 2010, the region's prized cod had been in a perilous decline for two decades.

Eric Schwaab, who in 2010 became assistant administrator for NOAA Fisheries and is now the chief conservation officer for the National Aquarium in Baltimore, said that even as federal officials tried to rebuild dwindling fish stocks in the Atlantic, local fishers balked at regulations. "At every point when we were trying to turn a corner in the Northeast, economic and political pressures would come to bear and fishers were granted short-term flexibility at the expense of long-term sustainability."

Indeed, as fishers brought their protests to the U.S. Capitol in early 2010, then-University of Maryland research professor Dennis King published a study in Marine Policy showing there was insufficient oversight of the Northeast's catch, including cod, haddock, halibut and flounder. Moreover, he found illegal fishing had nearly doubled since the 1980s, in part because fishers had an economic incentive to overfish, given the low fines and slight risk of being caught.

But the continuing probe of NOAA law enforcement exposed unfair fines and inconsistent penalties. By 2012, investigators had reviewed 219 complaints — mainly from fishers in the Northeast — out of more than 8,000 civil enforcement cases sent to NOAA's general counsel since 1994. A total of 27 fishers and businesses had their complaints confirmed, and more than $1.2 million in fines was wiped away or refunded.

Lubchenco made more changes, standardizing penalties for civil offenses and streamlining regulations. She also shook up the management of NOAA enforcement efforts.

The most controversial move was a staffing shift designed to address a recommendation by the inspector general: The report noted that there were far more criminal agents than civil agents even though the cases were mostly civil. The agency moved away from investigative criminal agents — like Doyle and his team — and toward uniformed "enforcement officers" who focus on patrol and compliance.

That meant losing 74 investigative special agents, who handle criminal and civil cases, out of 147 through attrition. The agency added 98 enforcement officers to the 18 already there.

Andrew Cohen, who led the Northeast enforcement division before taking early retirement in 2010, called the staffing plan "a charade." Doyle, for his part, noted that NOAA has partnered with state agencies and the Coast Guard to beef up patrol resources, while adding, "Patrol has a place, but it is not going to find illegal imports on somebody's boat."

As the number of investigative agents fell, civil enforcement cases dropped, too. From 2008 to 2013, Northeast region cases sent by agents to NOAA's general counsel plummeted 85 percent — from 244 to 36. Regional criminal cases sent to the Justice Department increased from sixto 19 over that period. Such cases, which take longer to develop, fell nationally by 50 percent.

Smullen, the NOAA spokesman, said the statistics do not necessarily reflect the success of enforcement because they do not account for other compliance efforts. For example, the Northeast now has an officer who works with the community to ensure fishers report their catch correctly.

Smullen said the agency's program in the Northeast is based on "compliance assistance first, and enforcement if not."

Lubchenco, who has returned to Oregon State, said her record at NOAA speaks for itself: The number of fisheries rated as "overfished" declined from 46 to 40 from 2008 to 2013 — though Northeast stocks were so depleted that in late 2012 the Commerce Department declared the fishery a disaster, allowing fishers to apply for financial assistance.

Shifting NOAA's agents toward compliance is appropriate, she said.

Asked about the drop in enforcement cases, the shift to patrol agents and concerns that the agency is less able to respond to highly complex investigations called for in the president's directive, she said there are too few agents overall.

Keeping it local

On an overcast September morning, more than a dozen chefs from Baltimore and Washington boarded the Sawyer to travel across the Chesapeake Bay to Hoopers Island. Their mission: to see firsthand where their crabs and oysters came from.

They toured W.T. Ruark's crab processing company on the banks of the Honga River in DorchesterCounty, where about a dozen women from Central America listened to mariachi music while extracting meat from Maryland blue crabs. Later, they headed down the street to Barren Island Oysters to tour its oyster farming operation.

The tour was part of an initiative by Maryland's Department of Natural Resources to connect chefs and retailers with local seafood sources. The agency wants to promote Maryland businesses while mitigating the impact of imports — especially pirated or otherwise illegal seafood. More than 700 chefs from New York to Virginia have toured Maryland's Eastern Shore seafood facilities in recent years. The state also has a "True Blue" program that promotes restaurants and retailers who use Maryland blue crab.

This group included Joseph Cotton of the National Aquarium and Tom Blundell of Wolfgang Puck's Newseum restaurant in Washington — chefs who live on the bay and specialize in indigenous seafood. One of Cotton's favorite preparations: local oysters stuffed with local crabmeat and topped with a light spinach cream sauce.

Blundell acknowledged that he has been victimized by seafood fraud, getting hoodwinked "100 times" in his early years. He recalled buying what he thought was escolar but was actually wolffish — a cheaper species — for years. In addition, he said, vendors would thaw frozen fish caught in foreign waters and try to pass it off as local and "just off the boat."

A few years back, Blundell was fooled in another deal. He bought "Maryland crab" but became suspicious because it didn't taste right.

Foreign crab has a "chalky, pasteurized taste" he explained, while Maryland crab has a "fresh, sweet" taste. "Once you have fresh Maryland blue crab, you know the difference immediately."

Now he buys his fresh crab from a Washington-based distributor that specializes in tracing the origin of its seafood. He also has an employee who scrutinizes the fish for him and researches what they should look like. The employee, Blundell said, "can take one look and say, 'Chef doesn't even want to see this.'"

Crab repackaging scams have popped up before in Maryland. In 1992, for example, a health inspector caught employees at Tideland Seafood Inc. of Dorchester County repacking crabmeat from Pakistan into containers labeled as Maryland seafood; the owner was fined $5,000.Around the same time,Jessup-basedBelvedere Seafood was caught repacking and fined $8,000.

But such violations are extremely difficult to uncover, said Alan Taylor, chief of the state health department's Office of Food Protection. Inspectors can check receipts to determine whether a product is properly labeled, but their focus is sanitation.

At the national level, the Food and Drug Administration inspects less than 1 percent of imported seafood specifically for fraud, according to a 2009 Government Accountability Office report.

Blundell said the best way to prevent fraud is to visit suppliers. "You see it, touch it. Use your senses on it and do it over and over, and you realize 'Wow, I was really getting screwed over before.'"

Data show a dramatic shift toward imported seafood. According to the Zepol database, which pulls data from U.S. Customs forms, Maryland seafood companies imported more than 41,000 metric tons of crabmeat over the past decade — the equivalent of picking the Chesapeake Bay's blue crabs more than twice over. Meanwhile, in 2013, imports accounted for 94 percent of the seafood consumed in the United States — up from 54 percent in 1995, according to NOAA.

Gjerde, of Woodberry Kitchen, an advocate of locally sourced foods, has mixed feelings about Obama's push to improve the traceability andregulation ofimports. He feels the strategy is missing the bigger point of developing sustainable fisheries.

"Do we want to make it easier to get fish from far away?" Gjerde asked. "I'm not sure about that. We need to look at the restorative process."

Picking their battles

As Gjerde and other bemoan the impact of illicit seafood, Doyle and other NOAA teams are being forced to make some tough choices because of a lack of manpower.

In the Chesapeake Bay, Doyle's team has passed on a striped bass overfishing investigation; in North Carolina, the local NOAA team passed on a case in which agents suspected imported grouper to be catfish from Vietnam. Doyle said he's looking to the alleged regulatory violations noted in Mikulski's letter to Obama, but added that his resources are limited.

The president's task force is expectedto recommend plans to improve the traceability of seafood imports like the Indonesian crab coming into Maryland — so consumers know exactly what they're eating and where it originates.

Secretary of State John Kerry, who helped introduce the president's initiative at a conference this summer, told the audience, "Without enforcement, these plans will take us only so far."

But staffing changes continue. Current plans have NOAA's Office of Law Enforcement cutting another 20 special agents, though the agency is reviewing its 2012 staffing plan.

Doyle, who is scheduled to retire in January, has been training new enforcement officers for routine patrols — like checking fish sizes and learning to identify fish species.

One early morning in August, his team traveled to New York City's Fulton Fish market, which has enough space for seven football fields and is packed with seafood from all over the world.

Doyle stuck his hand into a tuna to show one of his new officers how to distinguish between different types of the fish. The agents also paid special attention to the number of mahi mahi, a species that sells for a high price, and checked for amberjack, a common substitute.

On another day, Doyle and Ray, his fellow agent, accompanied two new patrol officers who just joined the team to New Jersey's Point Pleasant port for a random inspection — the sort of work Doyle's team has generally left to the Coast Guard or state authorities.

As a gray lobster boat named Major Expense approached the dock, Ray recognized it and told the officers: "That's Johnny!"

The new patrol officers boarded and began measuring lobsters with rulers. They checked for any pregnant females, and made sure the boat's permit and gear were in order. The lobsterman, John Van Salisbury ofBrick, N.J., was surprised — and angered — by the inspection.

He glared at Ray. "I … hate him," Van Salisbury said. "I would like to beat his [expletive]."

Van Salisbury was the subject of one of Ray's investigations a decade ago.

After receiving a tip that Van Salisbury was stealing lobsters off the New Jersey coast, Ray secretly affixed unique identifiers to a number of lobsters and pots belonging to another fisherman. Van Salisbury showed up with them, and was fined $152,500 for gear tampering and lobster theft. He's still angry because he believes the fine was excessive.